Report: Scottish businesses report return to confidence

The latest ICAEW/Grant Thornton UK Business Confidence Monitor (BCM) suggests Scottish businesses recorded a confidence score of +12.9 for the third quarter of this year, up 20.3 points from last quarter's score of -7.4

Scottish businesses confidence has returned to positive territory and growth is forecast will stabilise in the coming 12 months, a new report suggests.

The latest ICAEW/Grant Thornton UK Business Confidence Monitor (BCM) suggests Scottish businesses recorded a confidence score of +12.9 for the third quarter of this year, up 20.3 points from last quarter's score of -7.4.

However Scotland remains the least confident part of the UK, with confidence levels well below the British average of +22.4.

The study suggests Scottish businesses expect growth to stabilise - or even increase – in the coming year following a period of slowing year-on-year sales volume.

The BCM report suggests sales volumes are forecast to rise by 4.4 per cent in the next 12 months, up from the 3.9 per cent rise reported in the past year.

However Scottish businesses report a number of challenges have emerged in the third quarter, namely skills shortages and the level of competition in the marketplace.

The proportion of businesses reporting availability of non-management skills rose from 18 per cent last year to 34 per cent this year and 42 per cent said competition is a greater challenge than a year ago, compared with 26 per cent at the same point last year.

Capital investment annual growth also slowed to 2.3 per cent in the past 12 months, down from 3.9 per cent at the same point in 2014.

Survey respondents suggest they may lower their investment spending by 0.4 per cent in the coming year.

ICAEW Scotland president Andrew Hewett said: “Whilst it is encouraging to see confidence increase, there is still a degree of caution in the air.

“While last year's referendum and the recent general election are now behind us, the Holyrood elections are still to come and this - along with uncertainty about the potential impact of a vote in favour of leaving the EU - seems to be impacting on optimism.

“Many firms seem to be adopting a 'wait and see' approach when it comes to decisions on spending, for example, so it is possible that we will see a similar degree of caution for some time to come.”

Grant Thornton UK's managing partner in Scotland Kevin Engel, added: "It is encouraging to see that business confidence in Scotland has increased more this quarter than elsewhere in the UK.

“With sales predicted to rise and growth expected to stabilise within the next year, we anticipate fewer insolvencies.

“This rise in optimism is perhaps also in part a reflection of recent high profile investments in the oil and gas industry and suggestions of a recovery in the sector by 2017.

“However, it is important to acknowledge that Scotland remains the least confident part of the country and not to forget the challenges that many businesses continue to face.”